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Virtu Financial Posts Preliminary Q2 Report Through May 2020

Zacks Equity Research

Virtu Financial, Inc. VIRT recently announced the preliminary estimates for its second-quarter 2020 revenues through May 31, 2020.

On a preliminary basis, Virtu Financial expects its trading income, net to be in the range of $460-$474 million for the two months ended May 31, 2020. Adjusted net trading income is anticipated between $425 million and $440 million.

The company projects average daily adjusted net trading income in the bracket of $10.37-$10.73 million per day. Its results are likely to reflect its strong fundamentals and gains from the current market volatility.

Q1 Results

Virtu Financial’s first-quarter 2020 earnings per share of $2.05 beat the Zacks Consensus Estimate by 35.8%. Moreover, the bottom line skyrocketed around 503% year over year.

The company benefited from the market volatility amid the COVID-19 outbreak.

Revenues of $784 million soared 242.4% year over year on the back of heightened market volatility, bid-ask spreads and trading volumes and asset classes. Moreover, the top line surpassed the consensus mark by 33.8%.

Adjusted trading income of the company surged 242.8% to $784.5 million year over year.

What to Expect

Per the last earnings call, management reported reaping solid gains in April, which indicate its preliminary expectations. This leading provider of financial services and products also made a prepayment of around $188 million in principal toward its senior secured first lien term loan, which in turn, will help it save $7.3 million in annual interest expense.

Management also stated that it expects almost null expenses for travel and marketing in the second quarter.  This should lead to a decline in expenses and aid margins.

The company gains traction from market volatility and thus, the recent coronavirus pandemic aided it to earn a sweet spot. Being a high-frequency trader, Virtu Financial suffered in recent years due to an uninterrupted financial market. However, the pandemic-led crisis proved to be a boon for the company as market volatility soared. With greater instability comes in an increased need for liquidity, which in turn, provides the company with more trading and profit opportunities.

Moreover, both its Market Making and Execution Services segments, which have been delivering solid results, are expected to keep the momentum alive in the current quarter.

At present, the company is well-poised for growth on the back of its strategic initiatives, well-performing segments and current market uncertainty.

The company expects to report its full second-quarter results in early August.

Zacks Rank and Price Performance

Shares of this Zacks Rank #1 (Strong Buy) company have gained 40.1% year to date against its industry’s decline of 11.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.



Other Stocks to Consider

People interested in the finance sector may consider some other top-ranked stocks like Oaktree Specialty Lending Corp. OCSL, Jefferies Financial Group Inc. JEF and PPDAI Group Inc. Sponsored ADR FINV.

Oaktree Specialty is a business development company, specialized in investments in the middle market, bridge financing, first and second-lien debt financing, etc. The company currenlty has a Zacks Rank #2 (Buy) and a four-quarter positive surprise of 10.8%, on average .

Jefferies Financial engages in investment banking and capital markets, asset management and direct investing businesses. The stock currently has a Zacks Rank of 2 and a four-quarter positive surprise of 42.1%, on average.

FinVolution Group operates an online consumer finance marketplace through its platform in the People's Republic of China. It managed to deliver a trailing four-quarter beat of 111.1%, on average. The stock currently sports a Zacks Rank of 1.

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Jefferies Financial Group Inc. (JEF) : Free Stock Analysis Report
 
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